Sydney housing most affordable since 2009

''It gives another tick in the box that gives us optimism that we'll finally see a housing recovery in 2013." ... Sydney housing is more affordable.
Photo: Rob Homer

HOUSING in Sydney is more affordable than any time since the global financial crisis shook the property market three years ago.

And if the brief improvement in affordability caused by the crisis is set aside, the city's housing is now more reasonably priced, relative to incomes, than at any time in the past decade, the quarterly Housing Industry Association-Commonwealth Bank housing affordability index has revealed.

A combination of falling interest rates, stable property prices and rising wages has contributed to a sustained improvement in the relative cost of buying a home. Sydney's housing affordability index has risen by 13 per cent since the March quarter last year.

A year ago it took two average full-time wages to affordably service a mortgage for a median priced Sydney house, but that has dipped to 1.84 average full-time wages. The average monthly loan repayment required in Sydney has fallen by $422 to $3,453 over the past 18 months, the index shows.

The Housing Industry Association's chief economist, Dr Harley Dale, said that apart from a short spike in affordability caused by the GFC Sydney's housing was now more affordable than at any time since the June quarter 2002.

''It gives another tick in the box that gives us optimism that we'll finally see a housing recovery in 2013,'' he said. ''We can have some confidence that moderate price growth will return to the market over the next couple of years, but I don't think we need to fear another price boom lurking around the corner.''

These trends could help drive a long-overdue recovery in the state's residential construction industry, Dr Dale said.

Interest rates have fallen by a full percentage point since May and this promises to drive further improvements. Even so, Sydney's property market remains the least affordable in the country. While the city's housing affordability index rose 4 per cent to 54.2 in the September quarter, that was still well below the national index which was up 5.3 per cent to 65.8.

The typical monthly mortgage repayment required in Sydney was $873 higher than the national average. Nationally, housing affordability has improved for seven consecutive quarters.